Israeli and Palestinian negotiators were set to resume talks with Egyptian mediators in Cairo Sunday with the hope of reaching a more permanent ceasefire in the Gaza Strip, as thousands of Israelis marched in support of a peace deal in Tel Aviv.

With a five-day ceasefire between Israel and Hamas-led militants in Gaza due to expire at midnight on Monday, the Egyptian government is calling for both sides to agree to a longer-term truce and avoid a return to bloodshed in a conflict that has killed at least 1,980 Palestinians and 67 Israelis in more than a month.

The Egyptian proposal, seen by the AFP news agency, would see a new ceasefire begin at the expiration of the old one and new talks held on the thorniest issues, including demands for a seaport and airport in Gaza, to begin in a month's time.

Negotiations about handing over the remains of two Israeli soldiers in exchange for the release of Palestinian prisoners in Israeli jails would also be postponed, according to the document, while a buffer zone along Gaza's border with Israel would be gradually reduced and guarded by Palestinian Authority security teams.

The European Union welcomed the ceasefire in Gaza and said it was ready to expand a police mission in Rafah, on the border with Egypt, and train Palestinian Authority customs personnel and police for redeployment in Gaza.

It said EU police would monitor the transit of supplies needed for Gaza reconstruction and try to prevent weapons from being smuggled into the territory.

A mission of 70 European police officers was set up at the crossing point in 2005, tasked with monitoring movements of people, goods and vehicles at Gaza's only window to the outside world that bypasses Israel.

But it was suspended two years later after Hamas seized power in the Gaza Strip.

"A return to the status quo prior to the latest conflict is not an option," said the EU Council on Friday following a foreign ministers' meeting in Brussels.

Peace march in Tel Aviv

The EU said a durable ceasefire must be accompanied by lifting closures on Gaza and called on "all terrorist groups" in the territory to disarm.

"Commitment to the principle of demilitarisation, to be implemented by an effective mechanism, will ensure a fundamental change of the situation," it said.

Israel, under pressure from citizens who have endured more than 2,790 rocket attacks since July 8, refuses to countenance any major reconstruction effort without full demilitarisation.

Thousands of Israeli supporters of peace talks with the Palestinian Authority to end the Gaza conflict demonstrated in Tel Aviv on Saturday.

The pro-peace protest was the largest in Israel since it launched operation Protective Edge on July 8.

It was organised by the opposition leftwing Meretz party, the communist Hadash party, and Peace Now, a group opposed to Jewish settlement building on occupied territory.

Meretz chief Zehava Galon called on Israeli Prime Minister Benjamin Netanyahu to resign. "He has failed, both for security and for peace – he must go," she said.

Police were deployed in force Saturday night in Tel Aviv's Yitzhak Rabin Square to prevent trouble with counter-demonstrators from the far right.

On Thursday, the same venue hosted a demonstration by around 10,000 Israelis, supportive of the military operation, urging the government and the army to end rocket attacks from Gaza once and for all.

Mixed signals

Though there were signs of optimism from Palestinian negotiators that a peace deal could be reached in Cairo, Hamas officials have struck a more hard-line note.

Azzam al-Ahmad, who heads the Palestinian delegation at the Cairo talks, told AFP on Saturday he believed that an agreement for a longer-term truce could be reached.

"We have high hopes of reaching an agreement very soon, before the end of the truce, and perhaps even, very quickly, for a permanent ceasefire," he said.

But Hamas spokesman Sami Abu Zuhri insisted that there can be no return to peace without a lifting of Israel's eight-year blockade of the beleaguered coastal enclave, while other demands such as the establishment of a seaport and airport must also be met, said Osama Hamdan, the head of Hamas’s foreign affairs.

“Israel must accept the demands of the Palestinian people or face a long war,” said in a Facebook post.

With demands seemingly irreconcilable, the Egyptian mediators and both sides will be hard tasked to hammer out a wording that each can present as some kind of achievement.

Israel refuses to deal directly with Hamas, whose charter calls for the destruction of the Jewish state, although Hamas is part of the Palestinian delegation that also includes Islamic Jihad and the Palestinian Authority of president Mahmoud Abbas.